The action
“The rumors are true,” a North Carolina TV station announced when the governor flew to the hometown movie studio to break the news this past week. “Tony Stark and the third installment of the Iron Man movie franchise will fly into Wilmington.” Great news for North Carolina maybe but for the Los Angeles movie and TV community it felt like a punch in the gut. Thanks to the state’s generous 25% production credit, North Carolina’s EUE/Screen Gems Studios sealed the deal. Manhattan Beach-based Marvel Studios considered making the third movie in Los Angeles just like the first two, but the 25% credit proved too hard to resist. California has a 25% credit — which excludes big budget studio productions. Marvel also considered Michigan and New Mexico but North Carolina won out because of the size of the facility as well as the tax credit.
The reaction
People are saying:
1) I hope they will include the following characters in future Iron Man sequels:
Bethany Cabe, Force, Rumiko Fujikawa, Guardsman, Iron Man 2020.
I look forward to seeing the following villains in future Iron Man sequels:
Arsenal, Beetle (Abner Jenkins), Blizzard (Donnie Gill), Cobalt Man, Controller, Dreadknight, Edwin Cord, Ezekiel Stane, Fin Fang Foom, Firebrand, Firepower, Ghost, Grey Gargoyle, Hypnotia, Justine Hammer, Iron Patriot, Kearson DeWitt, Killer Shrike, Living Laser, Madame Masque, Mandarin, Mauler, Melter, MODOK, Morgan Stark/Gregory Stark, Raiders, Spymaster, Sunset Bain, Sunturion, Temugin, Titanium Man, Unicorn, Ultimo, Wong-Chu.
2) Alot of companys are leaving California, I wouldn’t be shocked if studios move out of the state and begin building huge lots in Hollywood Florida. *rimshot*
3) Already happening. “Rock of Ages” is filming at a studio in Miami, even though it takes place in LA. A huge Sunset Blvd set has been built – it’s quite an impressive and cool looking set.
Miami isn’t a threat right now, but can be – its already a large production center, especially for television (albeit mostly Spanish language) and offers most of the weather and glamor of Los Angeles in a tax-friendly red (or purple, if you must) state.
4) To quote Jack Warner When the Red Robin Comes bobbing, he impersonated himself and made his employees clap to his radio performance. I use this quote for a reason.
Life is too good in LA. They will never move their offices to NM, Vegas, Seattle, etc etc.
Once Cali bounces back and the want to be a producer, director, writer phase is shifted back to the great times of the 20′s 30′s etc. Cali will be the the greater movie maker until infinity.
5) This is just another attempt by studios to get California into a race to the bottom where even if we put some more skin in the game, the studios would still chose another more desperate region that’s putting it’s skin, heart, liver, and lungs into the game.
Interestingly enough the article fails to mention that the reason Michigan and New Mexico lost iron man is because they are either getting rid of or capping their own film subsidy programs. They are making investments in films that get up and leave right after the shoot is over. Jerry bruckheimer is already threatening new Mexico to take work to Louisiana if new Mexico does not INCREASE and match Louisiana’s 30% rebate. Don’t forget about Canada either.
So what should California do?
The us studios are all based here and will not and cannot leave. For every dollar a studio gets in subsidies, the state should charge a countervailing tax to negate that value. That immediately ends the race to the bottom. The studios will cry and threaten to leave but would you really believe that when they’ve been unable to stay in other states once the subsidy goes away. Play hardball.
6) The studios could actually leave the country. Doesn’t Woody Allen film in France a lot to cut costs? Another way to handle it would be to not tax business in America. After all, business don’t really pay taxes, people pay taxes.
7) Here’s the problem: despite the fact that the studios are based in Los Angeles, their parent companies (with the exception of Disney) are based elsewhere. More importantly, one isn’t even a US company (SONY) – and News Corp, despite being registered in the US is philosophically NOT a US company. So you start with a corporate culture that has no real attachment to LA. And these companies, not unlike most multinationals (and most US corporate giants) will always gravitate to the cheapest dollar (labor or otherwise). The states that have instituted the tax credits/rebates are being very smart about being attractive to this mindset. LA is quickly becoming non-competitive in this regard. Add to the mix that 70% of a movie’s box office is from international and it’s home base really doesn’t matter. All these things combine for a perfect storm for the film/TV business in LA. This is not all about tax credits, it is about massive media consolidation. Arguably Paramount (Viacom – based in NY and Boston) would make more money selling the studio for real estate than continue to cover the overhead of a massive chunk of land in LA while making movies everywhere but. It certainly makes economic sense (especially if you’re an accountant!).
One last note – don’t forget that in the 1910′s, CA offered many economic subsidies/economic realities that helped lure the business Westward. The old canard about the weather was not the main reason for the move (that’s just a popular myth – because the weather is nice…). The reality was that the state made it very attractive to the East Coast Exhibitors (who were starting to produce their own product) to relocate to LA. Further, because of the way copyright/trademark laws were handled on a state level at that time – and Edison controlled the trademark for the film cameras and projectors on the East Coast and was very litigious about it all – it made sense to get as far away from his control as possible. Interesting how it all comes around.
8) Wrong. There were two reasons for why Michigan lost out to NC. One was the fact that NC’s subsidy was already in place while the funds for Michigan’s subsidy were promised but still hadn’t been raised.
Additionally, the Wilmington area is much nicer… it’s a college town by the beach that offers more scenic locations, better looking extras and an impressive assemblage of competent crew members who have built years of experience working on everything from One Tree Hill and Eastbound and Down to Blue Velvet and The Hunger Games.
“The rumors are true,” a North Carolina TV station announced when the governor flew to the hometown movie studio to break the news this past week. “Tony Stark and the third installment of the Iron Man movie franchise will fly into Wilmington.” Great news for North Carolina maybe but for the Los Angeles movie and TV community it felt like a punch in the gut. Thanks to the state’s generous 25% production credit, North Carolina’s EUE/Screen Gems Studios sealed the deal. Manhattan Beach-based Marvel Studios considered making the third movie in Los Angeles just like the first two, but the 25% credit proved too hard to resist. California has a 25% credit — which excludes big budget studio productions. Marvel also considered Michigan and New Mexico but North Carolina won out because of the size of the facility as well as the tax credit.
The reaction
People are saying:
1) I hope they will include the following characters in future Iron Man sequels:
Bethany Cabe, Force, Rumiko Fujikawa, Guardsman, Iron Man 2020.
I look forward to seeing the following villains in future Iron Man sequels:
Arsenal, Beetle (Abner Jenkins), Blizzard (Donnie Gill), Cobalt Man, Controller, Dreadknight, Edwin Cord, Ezekiel Stane, Fin Fang Foom, Firebrand, Firepower, Ghost, Grey Gargoyle, Hypnotia, Justine Hammer, Iron Patriot, Kearson DeWitt, Killer Shrike, Living Laser, Madame Masque, Mandarin, Mauler, Melter, MODOK, Morgan Stark/Gregory Stark, Raiders, Spymaster, Sunset Bain, Sunturion, Temugin, Titanium Man, Unicorn, Ultimo, Wong-Chu.
2) Alot of companys are leaving California, I wouldn’t be shocked if studios move out of the state and begin building huge lots in Hollywood Florida. *rimshot*
3) Already happening. “Rock of Ages” is filming at a studio in Miami, even though it takes place in LA. A huge Sunset Blvd set has been built – it’s quite an impressive and cool looking set.
Miami isn’t a threat right now, but can be – its already a large production center, especially for television (albeit mostly Spanish language) and offers most of the weather and glamor of Los Angeles in a tax-friendly red (or purple, if you must) state.
4) To quote Jack Warner When the Red Robin Comes bobbing, he impersonated himself and made his employees clap to his radio performance. I use this quote for a reason.
Life is too good in LA. They will never move their offices to NM, Vegas, Seattle, etc etc.
Once Cali bounces back and the want to be a producer, director, writer phase is shifted back to the great times of the 20′s 30′s etc. Cali will be the the greater movie maker until infinity.
5) This is just another attempt by studios to get California into a race to the bottom where even if we put some more skin in the game, the studios would still chose another more desperate region that’s putting it’s skin, heart, liver, and lungs into the game.
Interestingly enough the article fails to mention that the reason Michigan and New Mexico lost iron man is because they are either getting rid of or capping their own film subsidy programs. They are making investments in films that get up and leave right after the shoot is over. Jerry bruckheimer is already threatening new Mexico to take work to Louisiana if new Mexico does not INCREASE and match Louisiana’s 30% rebate. Don’t forget about Canada either.
So what should California do?
The us studios are all based here and will not and cannot leave. For every dollar a studio gets in subsidies, the state should charge a countervailing tax to negate that value. That immediately ends the race to the bottom. The studios will cry and threaten to leave but would you really believe that when they’ve been unable to stay in other states once the subsidy goes away. Play hardball.
6) The studios could actually leave the country. Doesn’t Woody Allen film in France a lot to cut costs? Another way to handle it would be to not tax business in America. After all, business don’t really pay taxes, people pay taxes.
7) Here’s the problem: despite the fact that the studios are based in Los Angeles, their parent companies (with the exception of Disney) are based elsewhere. More importantly, one isn’t even a US company (SONY) – and News Corp, despite being registered in the US is philosophically NOT a US company. So you start with a corporate culture that has no real attachment to LA. And these companies, not unlike most multinationals (and most US corporate giants) will always gravitate to the cheapest dollar (labor or otherwise). The states that have instituted the tax credits/rebates are being very smart about being attractive to this mindset. LA is quickly becoming non-competitive in this regard. Add to the mix that 70% of a movie’s box office is from international and it’s home base really doesn’t matter. All these things combine for a perfect storm for the film/TV business in LA. This is not all about tax credits, it is about massive media consolidation. Arguably Paramount (Viacom – based in NY and Boston) would make more money selling the studio for real estate than continue to cover the overhead of a massive chunk of land in LA while making movies everywhere but. It certainly makes economic sense (especially if you’re an accountant!).
One last note – don’t forget that in the 1910′s, CA offered many economic subsidies/economic realities that helped lure the business Westward. The old canard about the weather was not the main reason for the move (that’s just a popular myth – because the weather is nice…). The reality was that the state made it very attractive to the East Coast Exhibitors (who were starting to produce their own product) to relocate to LA. Further, because of the way copyright/trademark laws were handled on a state level at that time – and Edison controlled the trademark for the film cameras and projectors on the East Coast and was very litigious about it all – it made sense to get as far away from his control as possible. Interesting how it all comes around.
8) Wrong. There were two reasons for why Michigan lost out to NC. One was the fact that NC’s subsidy was already in place while the funds for Michigan’s subsidy were promised but still hadn’t been raised.
Additionally, the Wilmington area is much nicer… it’s a college town by the beach that offers more scenic locations, better looking extras and an impressive assemblage of competent crew members who have built years of experience working on everything from One Tree Hill and Eastbound and Down to Blue Velvet and The Hunger Games.
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